In a recent update, Indian multinational automotive company, Tata Motors seems to be all set to demerger its business into two separate companies, Passenger Vehicle and Commercial Vehicle.
Tata Motors Demerger
After ITC, this is the second company who is looking for such a demerger which will split its shares in the ratio of 1:1 and list on NSE and BSE.
In the coming times, Tata Motors will announce its demerger record date and listing date.
First time this demerger was announced by the company which will split its business into two separate units in August 2024.
Under the Tata Motors demerger scheme, the existing business will be demerged into two separate companies.
Out of these, one will house commercial vehicles (trucks, buses and vans) of Tata Motors and the other company will house passenger vehicles (sedans, hatchbacks, SUVs, electric vehicles and Jaguar Land Rover).
According to Tata Motors, this demerger will allow the businesses to pursue their own strategies, differentiate themselves and enhance value for the shareholders.
Shareholding and Timeline
In a statement during August 2024, Tata Motors said, “The Board of Directors of Tata Motors Ltd has approved a Composite Scheme of Arrangement involving the demerger of its CV business undertaking and the merger of Tata Motors Passenger Vehicles (TMPV) with the existing listed company thereby resulting in two separate listed companies for the CV and PV businesses.”
It appears that Tata Motors shareholders will have the same shareholding in both the companies, under the Tata Motors demerger scheme.
Further, the share entitlement ratio will be 1:1, as per the Tata Motors website.
This simply means that Tata Motors shareholders will have an identical shareholding in both the listed entities.
Tata Motors said, “Pursuant to the Scheme, shareholders of TML will receive ONE share of TMLCV of face value Rs 2 fully paid up for every ONE fully paid-up share of Rs 2 held in TML of the same class (Entitlement Ratio),” in a statement on its website.
If you are wondering about the timeline then Tata company had said in a regulatory filing in August 2024 that the demerger of its business into two separate listed entities is expected to conclude in the next 12-15 months.
Adding, “the board has approved the scheme of demerger of Tata Motors into two separate listed companies and is expected to conclude in the next 12 to 15 months.”
Moving ahead, Tata Motors will announce a demerger record date in order to determine the eligibility of Tata Motors shareholders to whom the shares of the demerged company will be issued.
Once this demerger is fine, the shares of the demerged company will list on NSE and BSE for which listing date will be announced by the company.
